North-East Independent Economic Review

Andrew Griffiths Excerpts

Thursday 5th September 2013 Commons Chamber

[Mr Brown]

It would certainly be impossible for local authorities to do what the report suggests. My hon. Friend’s point is correct. If extra resources were to be supplied to enable them to do so, frankly it would not be the first priority for expenditure in local authorities, all of which are very hard-pressed at the moment even without taking on extra functions without the resources to carry them out. Let us remember that the recommendations, which effectively are for extra civil service support, be it central or local government—as I read the report, it is both—come just after the Government have closed the Government office for the region.

Of course there is a case for the seven local government leaders to meet. In effect, this replicates, but for a smaller area, the arrangement that pertained under the last Labour Government through the Association of North East Councils. Local authority leaders already take a close interest in economic development questions in their council areas, and they work with others when there is a common interest. But is not the lead on economic development supposed to lie with the LEP, not the local authority leaders alone? The local authority leaders are already all represented on the board of the LEP. What is the relationship between the two supposed to be?

A better approach to the Tyne and Wear passenger transport authority would be to amend the existing arrangements rather than create a whole new authority. The existing authority has the advantage of involving councillors who are not the leaders of their authority and can give the time to specialise in transport matters. Nexus and the integrated transport authority are already working hard to push ahead with many of the recommendations in the report, including smart ticketing and a consultation on a quality contracts scheme.

Similarly, I do not understand, and the report does not explain, what the specific input of the local authority leaders into skills training is expected to bring. The justification in the report is that the local government leaders know their own areas the best and therefore are best placed to identify skills needs and shortages. I am not sure that this is true. In any event, local authority leaders have a great deal to do already, and to demand that they specialise in skills and training issues as well as economic development and transport policy seems to me unreasonable.

A combined authority does not give the region any more access to Government, and it is Government who have the power and hold the purse-strings, and that is more so now than under the previous Government. We have had the LEP up and running now and that has not enhanced the region’s direct access to Government, where the big decisions are made. The LEP has had the lead on the enterprise zone policy for almost two years now. I am not an advocate of the policy, as I made clear at the time, but if it can be made to work, I want it to be made to work. But there is not much evidence of it working so far.

[Andrew Griffiths (Burton) (Con)]

The right hon. Gentleman talks about there not being much evidence of the policy working, but we should celebrate good news. Will he join me in congratulating Nissan on the great news today of the £250 million investment in its new car line, and the 1,000 jobs that go along with that? Let us celebrate good news for the north-east.

[Mr Brown]

I am happy to join the hon. Gentleman in that. Nissan is one of the great hopes for the region. It has the potential single-handedly to make a substantial impact on the employment issues in east Durham and in the city of Sunderland. When I was the regional Minister, I was a great enthusiast for the potential that was there and a great champion of it, and I was able to take its case to the heart of Government. I hope that that helped to bring about the arrangements that are now in place and the success the company now enjoys, but we should never lose sight of the fact that the principal reason for Nissan’s success is the management and the work force. I think that everyone in public life in the north-east wants it to succeed, will fight its corner and stands ready to help. I hope the issue will never divide us when we look for the way forward for our region.

My principal criticism of the report is that it is all about process, rather than outcomes. It is repetitive and has a scattergun approach to initiatives. For example, there is a flurry of ideas around one of the most pressing issues: the need for venture capital and the continuing difficulty in getting banks to lend. That problem is not unique to the north-east, but it has a particular impact on us because we are trying to develop the private sector in our economy.

The report proposes a range of initiatives, including exploring the potential for a regional business bank, a north-east access-to-finance scheme, an investor readiness programme and a north-east finance and investment board. It also proposes what are described as “new investment plans”, a “front of house system”, “client relationship management”, “re-location” schemes and a “North East International” body. There is a flurry of initiatives, but what does it all mean? Do they overlap? I cannot tell. At least, it is not clear from the report.

The report also restates existing projects as if they were new initiatives. I have already mentioned such cases in relation to transport, but there are other examples, such as the “Open Innovation and Growth Centres”, that are already working or have already been announced.

The report mentions in general terms desirable ideas and principles, such as an increase in apprenticeships, greater foreign direct investment and more young people from the region going to university. All those outcomes are desirable and none of these issues is new but, crucially, while stating that they are desirable, the report gives no indication of how best to achieve them. At the very best, the report’s recommendations would deliver administrative change for our region in a few years’ time. The need for action is now. Yet now the Government are actively sucking demand out of the regional economy by changing the national funding formulae for local government, the national health service, policing, transport and infrastructure investment, to our region’s disadvantage.

What the region needs is a politically led and determined drive, involving everyone who wants to help—this really should not divide us—to develop the private sector economy in the region. We have done a tremendous amount to help ourselves as a region, but the scale of the problem is such that more needs to be done. As well as determinedly driving forward the projects that we know are there, there is a case for a short-term emergency response to the emerging problem of long-term youth unemployment. Only central Government can do that. The Chancellor and the Business Secretary could explore incentivising the region’s small and medium-sized employers to take on an extra young person, or more than one, if only to prevent the corrosive and demoralising effects of worklessness and defeated ambition among the young.

In my view, things were moving in the right direction under the structures and leadership of the previous Labour Government. The report confirms that by setting out the region’s progress in the last growth cycle with 67,000 extra jobs, gross value added increasing by 57%, and tens of thousands of jobs created through greater foreign investment. The north-east was moving in the right direction, with the fastest growth rate of any English region, although admittedly from a more modest start. That was delivered under the former economic development structures, which would have worked well to get us through the economic downturn. The report is quick to offer new structures but gives no assessment of how well the old ones worked. In short, it correctly identifies the issues facing the region but is insufficiently bold in offering a way forward.

--- Later in debate ---

[Chi Onwurah]

The resources should be focused on our region. The partnership between the LEP and the combined authority should take control, as much as is possible under current structures, of our region’s future.

As we have heard, the fact that the Government have taken so much out of the region—£100 million has been taken out of Newcastle city council’s budget alone—does not make the task any easier; rather, it makes it much harder. What would help is control over the valuable European funds that are directed to the north-east, to ensure that they go to where they are needed. One area where the report falls down is in ignoring the importance of culture, inclusion and community. The people of the north-east are the north-east. They are an asset beyond a mere skills base. That is why the European social fund, currently administered by the Department for Work and Pensions, which focuses on extending employment opportunities and developing skills should be devolved. I understand that the DWP will match the fund only if it can control it. If that is the Minister’s idea of localism, it is certainly not mine.

There are too many people in the region who are too far from the jobs market to take advantage of the high-skilled economy that we want to build. Councils and industry in the north-east are showing the kind of leadership that we need, by working together—at long last, one might say—to form a new authority that will work with the LEP, universities, businesses and people.

[Andrew Griffiths]

I agree with the hon. Lady about the need to increase skills and training in the north-east. Will she therefore join me in congratulating the Government on increasing the number of apprenticeships available to young people in the north-east by 70% in the last three years?